Currency markets had been relatively quiet overnight until the last hour where action has picked up in GBP pairs on two significant events. The Queen’s speech kicks off a parliamentary session focused on enacting legislative changes related to Brexit including new national policies on immigration, sanctions, nuclear safeguards, farming, fishing, data protection and more. The big question now is whether the Conservatives can cobble together a coalition to pass the legislative agenda (which would be positive for the pound) or remains stuck in talks and political uncertainty (which has weighed on GBP since the election).

Even more significantly, hawkish change appears to be in the air at the Bank of England. Building on the three hawkish dissenters at last week’s vote to hold rates and QE, MPC member Haldane, one of the more dovish members in the group indicated that he favours starting to withdraw stimulus in the second half of 2018. This leaves BOE Governor Carney looking increasingly lonely on the dovish side and facing growing pressure to at least start cutting back last year’s emergency stimulus.  

The see-saw trend of recent days in the markets sees stocks in a downdraft this morning‎. Major indices are showing a sea of red with US index futures down 0.1%, the Dax down 0.6%, the FTSE down 0.75% and the Nikkei down 0.3%. The one positive area was China mainland indices which rose over 1% +, on reports that MSCI is planning to include China A shares in global indices starting in late 2018. 

Crude oil is down slightly overnight. There was a shakeup in Saudi Arabia succession plans with a new Crown Prince being named. API inventories fell 2.7 mmbbls. We could see more action in oil today around the DOE report. 

Later this afternoon, an interest rate decision is due from the Reserve Bank of New Zealand. The RBNZ is expected to hold rates steady and with the Kiwi Dollar trading lower since its last meeting, appears unlikely to threaten intervention either. NZD has been steady so far heading toward the decision. Comments on its slowing housing market could be relevant to Canada who also faces a bursting bubble. 

Corporate News

Orders continue to roll in for Boeing at the Paris Air Show with the 737 Max 10 attracting particular interest. 

Economic News

Significant announcements released overnight include:

US API crude oil inventories        (2.7 mmbbls) 

Upcoming significant economic announcements include:

10:00 am EDT        US existing home sales        street 5.55M

10:30 am EDT        US DOE crude oil inventories    street (1.2 mmbbls) 
10:30 am EDT        US DOE gasoline inventories    street 0.5 mmbbls
10:30 am EDT        US DOE distillate inventories    street 0.5 mmbbls

5:00 pm EDT        NZ RBNZ interest rate        1.75% no change expected

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